DBL Group gets $22.7m IFC loans

The International Finance Corporation (IFC) has extended $22.7 million (nearly Tk 195 crore) in loans to Hamza Textiles Limited (HTL), a dyeing and finishing company of DBL Group.

The financing will help build a new factory with advanced and resource-efficient technologies to respond to the evolving demands of consumers and create more than 900 opportunities for direct employment, according to a statement from IFC issued yesterday.

IFC's investment will help expand HTL's finishing capacity by 80 tonnes per day to reach a total capacity of 103 tonnes per day with its new factory, which will also be a Leadership in Energy and Environmental Design (LEED) certified green building, it said.

The loan's tenure will last eight years, including a two-year grace period, added an official of IFC, a private sector arm of World Bank Group.

"The new factory will allow HTL to work with new fabrics to meet increasing buyer requirements, widen its manufacturing base and highlight the effectiveness of advanced technologies to cut production costs and deliver climate benefits," said MA Jabbar, DBL Group's managing director.

The expanded operation is also expected to contribute $8 million to Bangladesh's economy directly and indirectly through local supply chains by 2028, said the Washington based agency.

It will also contribute $15 million in expected economic activities generated by additional income of employees, and boost opportunities for micro, small, and medium enterprises along the supply chain, it added.

HTL provides dyeing and finishing services for fabrics that are used in making garments by its sister companies owned by DBL Group, one of Bangladesh's largest integrated knitted apparel manufacturers and exporters.

The family-run DBL Group, comprising 28 companies, started operations in the apparel sector in 1991 and has interests in other industries, including ceramic tiles, dredging, telecommunications, and manufacturing of semiconductors.

"Bangladesh's garment industry is vital for the country's economy and delivering on its ambitions to transform into an upper middle-income country," said Hector Gomez Ang, IFC's regional director for South Asia.

To remain competitive, the industry needs to evolve to higher value-added products and adopt modern technologies, which are even more critical given the impacts of Covid-19.

Even before the pandemic, the industry was beginning to stagnate in terms of innovation and value addition.

"So, we hope this investment will serve as a demonstration model for others to move upmarket and remain competitive," he added.

IFC has been financing the local garment sector, which contributes more than four-fifths of Bangladesh's export earnings.

However, about 85 per cent of exports from Bangladesh come from only low-value garment products.

Till date, IFC has invested in five garment manufacturers in Bangladesh, providing more than $90 million largely in the form of debt financing.

The latest investment marks IFC's second engagement with DBL Group.

In 2013, IFC provided $10.5 million to Color City, another dyeing and finishing company belonging to the group.